Older residents feel insurance law pinch

Age-based prices too high for some

By Alice Dembner, Globe Staff | August 17, 2007

Older people shopping for health insurance through the state's new initiative are discovering a sobering reality: Prices for unsubsidized plans are twice as expensive if you're 60 than if you're 27, making insurance unaffordable or barely affordable for many in their later years.

Massachusetts has long allowed age-based pricing of private health insurance plans, but the new requirement that all adults have insurance combined with the new ability to compare plans on the Internet is leading to a mini- revolt.

"That is discrimination," said Evelyn Hartrey, a 60-year-old who found that the least-expensive plan would cost her $352 a month, while a 27-year-old would pay $176 for the same coverage.

Hartrey, who lives paycheck to paycheck in a mobile home in Carver, works for a dermatology group practice that doesn't offer health insurance. She earns a bit too much to qualify for state-subsidized coverage, but said $352 a month -- 13.6 percent of her income -- is "way out of my ballpark."

The state estimated last year that there were 78,000 people age 50 to 64 who did not have insurance. About 42,000 of them have incomes low enough to qualify for free or subsidized insurance from the state -- and they are signing up in greater numbers than expected. The state-subsidized plans charge the same premiums for all age groups.

But the remaining 36,000 individuals face premiums that may be a financial struggle unless they have access to employer-subsidized coverage, according to advocates. (At age 65, most people are eligible for Medicare.)

State officials acknowledge that insurance is unaffordable for some, but have made no special accommodations for older people. The state intends to fine anyone who doesn't obtain insurance, but will waive the penalty if premiums are deemed unaffordable for an individual.

Hartrey's relatively low income and the high price of insurance should make her eligible for a waiver. But she's hoping the state will offer older people another alternative. "They should have a sliding scale" for premiums tied to income, she said.

AARP Massachusetts, which has more than 840,000 members, is concerned about the premiums, as well as additional out-of-pocket costs, such as copayments for doctor's visits or medicine. National studies show that people age 50 to 64 typically spend more money for healthcare than younger people.

"Affordability for the 50-plus population is something we need to take a second look at," said Deborah Banda, state director of AARP Massachusetts.

AARP and a coalition of other organizations want the affordability criteria for waivers expanded. They'd like to see other out-of-pocket costs, such as deductibles and copayments, counted in addition to premiums when the state determines if insurance is affordable, which would enable more older people to avoid the penalty. However, it would still leave them without coverage.

"They want coverage, they need coverage, but there's a limit to how much they can sacrifice," said Jessica Costantino, AARP Massachusetts director of advocacy. "We'd like to see some sort of relief for people as they're aging."

And the ACT Coalition, which includes healthcare providers and advocates, would like to see the state cap any individual's out-of-pocket healthcare spending at 10 percent of income. Otherwise, "we think it is unfairly penalizing older individuals," said Linda Burgess, a spokeswoman for the coalition.

Ironically, the Massachusetts law allowing insurers to charge older people twice as much as younger people is designed to protect consumers from even larger price gaps.

Although some states allow insurers to deny people insurance because of preexisting conditions or charge individuals more because they are sick, Massachusetts does not.

When selling policies to individuals or to small groups of people, insurers are allowed to adjust rates by certain factors, including age and type of employment, and the highest rate cannot be more than twice the lowest for the same benefits.

Most people who buy insurance through an employer are insulated from the age differential, since companies negotiate rates on behalf of all employees.

But self-employed people with private insurance often experience sticker shock when they turn 50 or 55.

Nationally, in 2004, average healthcare spending from all sources totaled $5,263 per person for those age 50 to 64, compared to $1,509 for those age 20 to 29, according to an analysis of federal data by the Kaiser Family Foundation, a nonprofit health policy and health research group.

Given that, older people are getting a break on premiums since they are paying twice what younger people pay, said Dick Powers, a spokesman for the Commonwealth Health Insurance Connector Authority, the agency overseeing implementation of the state's near-universal insurance law.

"Is insurance expensive? Absolutely," he said. "Have we made it less expensive? Absolutely."

Celia Wcislo, a union leader and member of the authority's board, said the plight of older people is "a problem we still have to tackle."

"Do we have to look at different subsidies for older people?" she asked. "And is there money to do that?"

Karyn Barry, 57, was among the first to buy an unsubsidized plan through the authority, paying $449 a month for a basic plan with no prescription coverage.

She strings together several part-time jobs as a music teacher to support herself and her husband, who has Alzheimer's disease.

She was happy to find insurance for less than the $650 she was paying through one of her employers, even though her new policy is less comprehensive. But, she, too, is concerned about price.

"It's stomachable, but I wouldn't say it's affordable," said Barry, who lives in Waltham. "It seems like the older you get, the more it costs. Statistically, you're supposed to be earning your highest income as you get older, but for many that's not the case. It seems like there ought to be a level premium for all people."

Hartrey, who is paying off $800 in bills for treatment of a sinus infection, has been trying to figure out if there's any way she can find the money for insurance. Her only monthly bill that's higher is the $450 she pays to rent the land under her mobile home.

She could give up her car, she said, but then she'd have no way to get to work.

"There's no retirement in my future," said Hartrey, adding that she spent her meager savings recently for a new furnace and hot water tank. "I haven't been on a vacation for years. Plenty of nights I have popcorn for dinner."

She's even thought about asking her boss to cut her pay so she could qualify for subsidized coverage.

But right now, she's trying to live without it, trying to ignore the arm pain that sometimes shoots from her shoulder to her wrist, and "hoping the state will come up with a better plan."